An unexpected series of exciting events has evolved with regard to the functional studies of the frzb gene. It was found that the frizzled proteins are a family of receptors for the Wnt family of proto-oncogenes. Wnt proteins are signalling molecules which participate in a wide variety of developmental and neoplastic processes. Given the high similarity of the frizzled-like domain of Frzb with the presumed ligand binding domain of the frizzled receptors, we hypothesized that Frzb would also interact with Wnts. We were successful in demonstrating this interaction by a series of immunoprecipitation experiments using co-transfected mammalian cells. We identified the critical domains for the Frzb/Wnt interaction and showed that this direct interaction results in the inactivation of Xwnt8 in vivo when co-injected in Xenopus. The discovery that Frzb can act as a secreted antagonist of Wnt activity represents a major leap forward in research into Wnt signaling. To further analyze the role of Frzb in craniofacial and skeletal development we are conducting tissue-specific gene targeting studies in mice using homologous recombination and the Cre- loxp system. The targeted deletion of Frzb at different stages of development should provide important information on its physiological role.